Will gold prices touch Rs 70,000 mark in 2024? Here is what analysts have to say

Predicting the future prices of precious metals, particularly gold, is no easy task. Yet, there has been ongoing speculation in the market that gold prices could reach an all-time high of Rs 70,000 per 10 grams by 2024 end. Though this may sound improbable, several economic factors and market trends support this prediction.

'Risk factors may propel prices'

Adhil Shetty, CEO of BankBazaar.com, says, "Gold, as an asset class, performs well during periods of high inflation and economic uncertainty. The higher the economic risk factors, the more significant the gold returns tend to be. There has been speculation that gold prices may touch the Rs 70,000 mark in 2024. The persistence of risk factors such as elevated inflation and geo-political uncertainties amid slow global economic growth may trigger further appreciation for gold."

Jateen Trivedi, VP Research Analyst, LKP Securities, says, "The trajectory of gold prices touching the Rs 70,000 mark in 2024 is contingent upon several key factors. Currently, levels around Rs 66,000 appear plausible, given the prevailing circumstances. However, an extreme bull case scenario could indeed propel prices to Rs 70,000."

'Fed stance critical'

"One critical determinant is the stance of the US Federal Reserve (Fed) regarding inflation and interest rates. Should the Fed enact significant interest rate cuts around June or July 2024 in response to lower inflation levels nearing 2.00%, it could catalyse a surge in gold prices. The longer the Fed maintains accommodative monetary policy, the greater the potential for gold to reach the Rs 70,000 milestone," said Trivedi.

Geopolitical tensions, as mentioned above, particularly in the Middle East, also play a pivotal role. Heightened tensions tend to bolster gold prices, yet they can simultaneously perpetuate inflationary pressures due to disruptions in cross-border trade. Consequently, any escalation in geopolitical tensions could expedite the path towards the Rs 70,000 threshold.

'Wait till June'

Sachin Kothari, Director at Augmont Gold for All, says, "In the first week of December 2023, gold prices touched a new record high of $2150/oz in international markets and Rs 64400/10 gm in domestic markets on the reemergence of Geopolitical Tensions in the Middle East and on increased speculation that FED will begin cutting interest rates in March 2024, following a series of rate hikes in the last 20 months. But in the last two months, the scenario has changed a little bit, as the rate cut probability has moved to June 2024, as Inflation is not dropping fast enough."

The global economy has been experiencing a paradigm shift post-COVID-19 pandemic, with central banks across the world resorting to near-zero interest rates. Gold, with its non-yielding property, becomes an attractive option in such a low-interest rate environment. Also, gold demand is seen escalating with the increased purchasing power of consumers in emerging economies, especially India and China.

Gold is traditionally perceived as a safe haven by investors in times of economic crisis.  "There is still a possibility of gold touching $2300/oz (~ Rs 70000/ 10 gm) by the year's end if the FED starts cutting rates from the June meeting and other fundamental factors keep the prices supported," added Kothari.

Thus, investors should closely monitor the factors to assess the likelihood of such an outcome.

It is also important to note that these are estimations which are susceptible to fluctuations based on real-time global developments, policy changes, and market sentiments. Investors, therefore, should exercise caution and consider various aspects such as their financial goals, risk tolerance, and investment horizon before making any investment decision.

To conclude, while gold prices could touch Rs 70,000 by 2024, it is still a subject of speculation based on specific economic and market conditions. Regardless, gold continues to retain its appeal as a resilient and reliable form of investment.

Additionally, Shetty says it’s best not to speculate and evaluate gold on the basis of its long-term performance history. Gold remains a strong performer in times of uncertainty and can boost your portfolio in such times. As an asset class, it has typically performed well when equities are witnessing challenges. For investors, this stability is comforting. Diversification with gold must align with individual risk tolerance and return expectations. You can slowly and deliberately accumulate gold for your portfolio, thinking of it as a marathon, not a sprint. "When risk factors abate, gold returns will soften. Therefore, having the right proportion of gold—like 5-10 per cent of your holdings—may be better for growth-seeking investors. For the best returns, hold with a long-term perspective," Shetty said.

Also read: Sovereign Gold Bond Scheme 2023-24: Here are top 5 reasons to invest in SGBs over physical gold or gold ETFs